Recast Social Security Code for Informal Workers
Recast Social Security Code for Informal Workers

Recast Social Security Code for Informal Workers

The Code on Social Security 2020 (SS Code) was adopted by Parliament in September 2020 and obtained the consent of the President. Fortunately, implementation has been delayed due to states not issuing notices. Now, due to the Covid crisis, the implementation of all four new labor codes must be postponed to next year. This is good as there are many issues with the codes, especially the SS code.

Once the SS Code is in place, it will merge eight existing labor laws, including the Employees’ Compensation Act 1923, the Employees’ State Insurance Act 1948, the Employees’ Provident Funds and Miscellaneous Provisions Act 1952, the Maternity Benefit Act 1961, Payment of Gratuity, Act 1972 and the 1972 Act. Unorganized Workers’ Social Security Act 2008.

However, the SS code still does not provide universal social security for 91 percent of India’s workforce. This is particularly disappointing given that the demographic benefits of young workers who can support the elderly and the elderly will shrink from 2030 onwards and disappear by the end of the decade.

In addition, there are still many ambiguities in the SS code, which are discussed below.

This new code seeks to reconfigure the social security landscape of the disorganized sector, defined to cover different occupations, including self-employment. Concert and platform workers have been defined separately – the conceptual distinction between the self-employed and concert workers is left unsaid.

The central government is set to play a central role in shaping and managing the SS for the disorganized sector. So far, the SS for the sector was mostly absent, and the little that was provided was by state governments. Until now, the respective state governments are responsible for formulating and implementing social security schemes for disorganized sector workers. In the new SS code, this responsibility is partly taken over by the center.

According to the code, both central and state governments will formulate schemes in clearly defined areas. This means double authority for an individual disorganized worker. What is not specified is who should be the implementing authority at the state level and the fragmentation of the SS for disorganized workers will continue.

In addition, any eligible disorganized worker must be registered with Aadhaar, on a self-declaration basis, on a central government portal. Currently, unorganized workers in many states are registered on the state portal. The question remains whether the data of registered workers on the state portal will be transferred to the proposed central portal, or whether existing recipients will have to be re-registered.

Similar schemes also apply to concert / platform workers. The design of social security schemes for these workers is the responsibility of the Center. The problem is that the SS code provides for separate boards for disorganized and concert / platform workers. This approach seems overlapping, as concert / platform workers are a subset of the larger set that are disorganized workers.

As disorganized workers span the entire country, intergovernmental arrangements and cooperation become imperative. The Code does not allow this. The draft rules allow a nodal officer to be notified by the state government. But as disorganized construction workers are set free and moving from one state to another in search of livelihoods, coordination between states is still unclear. The draft rules did not contain a roadmap for such coordination.

About half of the informal workers are self-employed who have no employer-employee relationship. Most disorganized workers are not attached to any specific occupation – they switch from one occupation to another based on availability.

Most disorganized workers fall within the territory of the state rather than the center. In fact, it would be difficult at all to define an appropriate government for the disorganized workers, as they are mostly employed through layers of intermediaries. The SS Code allows for unorganized social security boards at the central and state level, but a large part of the organization appears to be with states.

Limited extent

The scope of the proposed main board seems limited. At present, states have unorganized workers ‘welfare councils under the Unorganized Workers’ Social Security Act, 2008. Most states have boards under this law.

There is no explicit mention in either the code or in the draft rules on the continuation of existing social security schemes run by state governments. When and when the code becomes operational, disorganized employees must register on the central portal. They are currently registered as beneficiaries of the respective state governments. But it’s not just about registration. The administration of social security for the disorganized sector has a different landscape in the new code. There are no instructions in the rules on how the existing SS schemes are in line with the proposed new landscape

For example, West Bengal has registered around 1.3 crore of unorganized workers as beneficiaries under existing social security schemes. The database is maintained by the state. Now that the code is operational, will the workers migrate to the central sphere, or will they have to re-register in the central portal?

In the new code, the social security framework for disorganized workers has become unnecessarily complex and cluttered. There are dual authorities and overlapping zones. The provisions of the draft rules further highlight these irregularities. There is an urgent need to simplify things and avoid more authorities before the Code enters into force.

If the central government’s goal is not to universalise social security for disorganized workers in the foreseeable future (as it should have been), it should consider limiting its role to advising state governments on the effective implementation of existing schemes.

Mehrotra is the editor of ‘Reviving Jobs: An Agenda for Growth (2020)’, and Sarkar is an independent researcher and work administrator at the West Bengal Government

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